UK tax authority clarifies Bitcoin policy - VAT exempt for mining and exchangeQedward writes "Exchanging or mining Bitcoins is exempt from value-added tax (VAT) in the UK, but accepting the virtual currency for goods and services is subject to it, HMRC said yesterday.
The guidance should give those handling bitcoins a bit more confidence about tax questions, as authorities around the world mull how the five-year-old virtual currency should be regulated.
HM Revenue & Customs described in a brief how it views Bitcoin in light of four taxes: VAT, corporation tax, income tax and capital gains tax.
While Bitcoin miners and those exchanging it for British pounds or foreign currency are exempt from VAT, people selling goods in exchange for virtual currencies are required to collect it. VAT is charged for most goods and services in at a rate of 20%.
When goods are sold for bitcoins, the amount of VAT to be paid will be calculated based on "the sterling value of the cryptocurrency at the point when the transaction takes place."
The guidance is murky on whether other activities involving Bitcoin are subject to corporation tax, income tax or capital gains tax. Like any other activity, the agency said, it "depends on the activities and the parties involved," and each case will be considered on its own."
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